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28 October 2014updated 27 Jun 2021 3:34am

Hungarian government’s tax on internet use inspires massive “free speech“ protest

The government in Budapest wants to bring in a tax on internet file transfers - and the public sees it as a tax on free speech.

By Ian Steadman

Sunday saw a huge protest on the streets of Budapest against the Hungarian government and the ruling Fidesz party, brought about in opposition to a planned tax on internet usage. Tens of thousands of people took place in the march, gathering outside of the economics ministry with their smartphones held up like candles, while others threw desktop computers, keyboards and other electonics equipment at the building which houses the Fidesz headquarters. In response to the protesters’ demands, the Hungarian government has said it will water down its proposals.

The controversy over this tax is not ill-founded. The government of prime minister Viktor Orban had announced that the levy would form part of a bill to be passed by the national legislature in early 2015, with the intention of charging ISPs an extra 150 forints (£0.40) per gigabyte of data traffic. Protesters, quite reasonably, concluded that this fee would be passed onto individual users, forming a regressive flat tax on online free speech.

A tax like this is unprecedented elsewhere in the world, but for Orban this kind of on-the-fly tax reform has become one of his government’s defining features. Fidesz was swept to power in the 2010 general election with a super-majority in the parliament, which was further renewed in 2014 – and for the last four years Orban has attempted to fix the gaping holes in the national budget with a range of fiscal measures that have come to be known as “Orbanomics”. He’s levied taxes on banks and other large companies, and nationalised private pensions funds, but as the economy has still failed to recover to its pre-crisis peak the measures have become increasingly more peculiar – including a 2012 tax on telecommunications firms for voice calls and text messages.

And, as the Financial Times reports, Orban’s government is now perceived as using these measures – like the internet tax – as a way to punish specific political groups who oppose him:

The internet levy, a charge of Ft150 (62 US cents) for each gigabyte of web data consumed, has galvanised unprecedented resistance to the ruling Fidesz party. But it has also highlighted how few tax options remain open to the government after four years of radical Orbanomics measures, which have failed to reduce the public debt from a level equivalent to 80 per cent of gross domestic product.

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“It’s not really a coherent discipline or set of ideas,” says Gyorgy Suranyi, a former central bank governor, who describes Orbanomics as a system of nationalisations, sweeping sectoral taxes and selective awards of government contracts that have increased government control over the economy.

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This right-populist “authoritarian capitalism” (as Bill Clinton has dubbed it) has begun to remind outsiders of Vladimir Putin’s Russia. Fidesz is largely antipathetic to the European Union, which it perceives as meddling in Hungary’s internal affairs when it “dictates” what the government can and cannot do. The rise of the far-right, neo-fascist Jobbik party, which came third in the last general election, the reports of a crackdown on human rights organisations, and a notable decline in Hungary’s standing in the Reporters Without Borders 2014 World Press Freedom Index, are all indicative of worrying trends in the EU nation, and mark it as one of the likelier candidates – alongside the UK – for a possible future EU exit.

In response to the protests, the government has said it will limit the tax proposal so there is a cap of 700 forints (£1.78) per month per individual user and 5,000 (£12.74) for businesses, yet both the IT sector and campaign groups remain understandably unhappy. Whether this marks the first crack in the foundation of Orban’s dominance of Hungarian politics remains to be seen.